Combined revenues of Taiwan's top-3 foundries - Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics (UMC) and Vanguard International Semiconductor (VIS) - are expected to fall 23.4% sequentially and 17% on year to US$8.27 billion in the first quarter of 2019, according to Digitimes Research.
A seasonal slowdown in smartphone chip orders, disappointing sales of the new iPhones, and unfavorable market conditions discouraging fabless chipmakers from building up stockpiles will drag down these foundries' revenues during the quarter, Digitimes Research believes.
Digitimes Research also identified the impact of defective chemical materials on TSMC's production earlier in the first quarter as another cause of the drops in the combined revenues generated by Taiwan's top-3 foundries during the quarter.
TSMC will see sales generated from 16/12nm process technology decrease substantially as a proportion of the foundry's total revenues in the first quarter of 2019, as the use of defective chemicals affected mostly its 16/12nm manufacturing lines.
As a result, Taiwan's top-3 foundries will see their combined revenues generated from 28nm and below process technologies slide as a proportion of the overall combined revenues to 54.9% in the first quarter from 59.5% in the fourth quarter of 2018. The foundries' overall wafer ASPs will also fall to a nearly 7-quarter low in the first quarter.
TSMC previously revised downward its revenue and margin outlook for the first quarter, due to a higher number of scrapped wafers than its earlier estimate. Nevertheless, the foundry said the wafers scrapped in the first quarter will be made up in the following quarter.